Industry experts and executives shared a positive outlook on Southeast Asia's hospitality market on the first day of the Hotel Investment Conference Asia Pacific in Singapore, citing a host of demographic and economic factors that are putting wind in the region's sails.
The strong demand for hotels in Southeast Asian countries is driven not only by increased business from outbound Chinese tourists but local residents as well, CBRE Hotels executive director Robert Mclntosh told S&P Global Market Intelligence.
"The economy is growing very fast in countries like Thailand and Vietnam, people's personal income is increasing, creating new demand," he said.
The increasing number of business travelers and expats from multinational companies is also boosting the sector, Mclntosh added, and pointed to Hanoi, Vietnam's capital, where employees from South Korea's Samsung Electronics Co. Ltd., which has two mobile phone manufacturing plants in the city, can take up as much as 70% of some hotels' rooms during certain events.
An executive from Malaysia-based property investment company Upper Penang Road Sdn. Bhd. echoed Mclntosh's view. Terence Wong, managing director of the company, said he is looking beyond Kuala Lumpur and actively seeking hotel investment opportunities in Thailand and Vietnam.
"I've visited Thailand recently, even many suburban hotels are nearly fully occupied," he said.
Official data shows a record 35.3 million tourists visited Thailand in 2017, up from 32.6 million in 2016. Chinese tourists remain the largest contributor to Thai tourism, and the country is expecting to see 37.5 million tourist arrivals in 2018.
Wong said he is bullish on Vietnam's potential to become the "next China," as the country is luring foreign investment and is set to become Asia's new manufacturing hub.
In addition to economic growth, Wong also said the populations of Thailand and Vietnam are large, another attraction for hotel investors.
Besides Thailand and Vietnam, industry players have also shown strong interests in countries like Myanmar and Indonesia.
Wyndham Hotel Group LLC, for example, said it is expanding its portfolio in Myanmar, as it is enjoying robust economic growth and quickly becoming a must-see destination for international travelers, while an executive from Bahamas-based Kerzner International Ltd. told S&P Global that Indonesia is likely to be his company's next destination in Asia after it ventured into China earlier this year.
"Asia still has a long way to go [in terms of hotel sector growth]," said Paul Macpherson, Kerzner's executive vice president of global business development.